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With transformation and incremental evolution of current OSS systems, the CSP’s digital business can realize digital business benefits faster
It is well acknowledged that digitization of services and networks reduces capex as well as overall cost of operation and allows launching serv...

In my last post I explored the reasons why communication service providers (CSPs) are now evolving into digital service providers (DSPs) in order to grasp the opportunities that the estimated $1 trillion digital economy will bring. The next question is “how” will they successfully achiev...

As the SDN and NFV train steams further on its journey towards network revolution, has the industry stopped to consider the wider impact? Is the infrastructure in place to serve the demands of the new system?
Trials continue with a bout of enthusiasm for the potential of SDN and NFV, which ...

Communications service providers (CSPs) have, over many years, become besotted by different forms of assurance. I’m not talking about insurance here; it’s more about making sure things work properly they way they were designed to and the way customers expect them to work.
Depending on...

In 1927, Charles Lindbergh won the Orteig Prize for being the first to fly non-stop between New York and Paris. The $25,000 prize (over $350K in today’s money) put up by New York hotel owner, Raymond Orteig, mirrored numerous aviation incentive prizes offered in the early 20th century that hel...

Supply and demand is the most important relationship between operators and users. It is also a relationship that is now undergoing a profound change because of one single development: the fact that today’s users are always connected to a smartphone or tablet.
As well as being “always ...

Dutch net neutrality bomb

Mobile operators in The Netherlands must be wondering what hit them. The Dutch parliament, acting with speed and ferocity rarely seen, has introduced net neutrality legislation that will have far-reaching effects on the viability, future profitability and even survival, of companies such as KPN, Vodafone and T-Mobile. If other European countries and the European Commission follow suit it could set the industry back ten years and stifle any urge to invest heavily in mobile broadband upgrades, the same demanded by Ms Neelie Kroes, the European commissioner responsible for the European Union’s digital agenda.

It all began when KPN announced poor first-quarter earnings because customers using smartphones were flocking to OTT services such as WhatsApp and Skype, thus sidestepping KPN’s lucrative SMS and international voice business. In response, KPN chief executive, Eelco Blok, announced plans to charge customers extra for using Skype and WhatsApp. This, along with the admission that KPN had been using ‘deep packet inspection’ (DPI) to monitor and manage traffic on its network caused outcry from consumers and consumer rights watchdogs.

Attempts to explain that DPI was common practice in the industry, and in no way encroached the privacy of consumers, only served to add fuel to the flames. Lack of understanding on how internet providers monitor traffic to remove bottlenecks, protect customers from viruses and spam, and at the same adhering to law enforcement demands, did not help the operators’ case.

They now find themselves having to allow customers to use whatever services they like, a move that will mainly benefit over-the-top (OTT) players who currently do not contribute to the operators coffers and make free use of sophisticated, limited and expensive network resources.

Vodafone rightly pointed out that the bill would “lead to a large increase in prices for mobile Internet for a large group of consumers” by blocking the company from offering varying prices for varying services. The operators inability to offer premium services to customers that were willing to pay, severely limits their ability to offer differentiated services and quashes any moves they may have planned to negotiate new peering arrangements with OTT players. (See “Euro 'Google Tax' battle looms” for more on this).

The biggest fear for other European operators is that their national regulators will jump in without taking a closer look at the ramifications. Worse still would be the European Commission mandating similar retrograde ‘net neutrality’ legislation. After all, the mandate of the EU Commission grants it power to oversee draft national regulatory measures through a consultation at EU level. This review mechanism is meant to consolidate and safeguard the internal European market. The role of the Commission is decisive, to ensure consistent regulation and to bring more transparency into the regulatory process. The Dutch move appears have been made in isolation.

The emotional arguments for equal access to all are not in question. Even the FCC in the USA took umbrage in its yet to be legislated rules, and treated mobile operators more sensibly, keeping in mind the spectrum and bandwidth limitations they have to work with. The exact opposite scenario has happened in The Netherlands, with mobile networks being singled out for ‘special’ attention.

If this does not send alarm bells through the industry, it should. The very livelihood, and possible survival, of many mobile operators is now in question. Surely it is time for them to group together to educate the market and lobby other legislators, before it’s too late.

Comments

3 comments

Toni GoellerWhy this outcry?Mobile operators sell data transport below cost. We all know that.- Is that the politicians' fault? No.- Can it be fixed by Deep Packet Inspection and application specific data transport tariffs? No.First, the cost of produ... moreWhy this outcry?Mobile operators sell data transport below cost. We all know that.- Is that the politicians' fault? No.- Can it be fixed by Deep Packet Inspection and application specific data transport tariffs? No.First, the cost of product definition and billing will add a prohibitive overhead to application specific data pricing. Vendors would profit, operators won't.Second, how do you define the application? What application is a VPN? Do you want to penalize subscribers for protecting their privacy?- Can it be fixed by charging application providers? No.Take Google and Microsoft providing search services. These services add to the attractivity of mobile data. Why should they set off the losses created by operators' dumping tariffs? Application providers have a superior negotiation position. Google can tell KPN: You're free to lock my site for your subscribers or to charge extra for requesting my URL. T-Mobile doesn't.

Lasse JohnsenMobile telecommunication providers, and indeed fixed line broadband providers, should be made to respect the freedom and privacy of consumers. Regulators are in the business of protecting the public interest, not the profits of operators. After all, mobil... moreMobile telecommunication providers, and indeed fixed line broadband providers, should be made to respect the freedom and privacy of consumers. Regulators are in the business of protecting the public interest, not the profits of operators. After all, mobile providers use the public, limited resource: frequency spectrum.

There is not sufficient competition in the mobile space to ensure consumer value. That is why European regulators have recent regulated the “very high” prices for roaming down to now just “high” prices. The price of service should reflect the cost and a reasonable mark-up. At least that is the textbook definition of functioning absolute competition. Nothing more, nothing less. You believe that this will affect investment. I think that argument is hard to substantiate.

What needs to change is the ludicrous opaque bundle market for data services. Broadband providers, mobile and fixed need to realise that it is not sustainable or acceptable in the long term for low usage users to subsi... less

8 July 2011

Dean BubleyI think this is a prime example of what I'd call "telcowash" - telling operators what they want to hear, in contradiction of reality and reasonableness.

It has been abundantly clear that both "vanilla" voice telephony and SMS were sitting-ducks for... moreI think this is a prime example of what I'd call "telcowash" - telling operators what they want to hear, in contradiction of reality and reasonableness.

It has been abundantly clear that both "vanilla" voice telephony and SMS were sitting-ducks for years. Smartphones and mobile Internet access were inevitably going to be a catalyst for change - that is not a surprise to anybody. WhatsApp appears to have been the beneficiary vs. KPN, but 99 others had 99% of the same functionality.

The problem is that there has been no serious product innovation and development in standardised mobile telephony or SMS for 30 years. In fixed telephony, phone calls are still the same now as 100 years ago. What other service has survived that long without evolving? In comparison, companies like Skype actually innovate. In 2009, it spent more on R&D than KPN. Google, Facebook and others also put money and effort into inventing new forms of communication and new business models.